Barrick putting Pascua Lama back on track

Barrick sees light at end of tunnel for Pascua Lama, signs initial deal with locals

Barrick Gold stopped work at the project on the Chilean-Argentine border in October, after investing $5 billion in it.

Canada’s Barrick Gold (TSX, NYSE: ABX) has reached an initial agreement with local communities from the north of Chile, which have opposed its stalled $8.5 billion Pascua-Lama gold and silver project in South America, the lawyer for the communities told La Tercera (in Spanish).

Barrick sees light at end of tunnel for Pascua Lama, signs initial deal with locals

Satellite view of the project area showing the Pascua-Lama open pit in red. (Wikimedia Commons)

The deal between the world’s largest gold miner and Chile’s Diaguita community is, to say the least, unique, considering that the indigenous group represented by attorneys Alex Quevedo and Lorenzo Soto was the one that managed to halt the project in April last year. They also were the ones who originally requested the miner’s environmental permit for Pascua Lama to be revoked.

The Toronto-based company, which is the subject of a number of class-action lawsuits over the project, stopped work at the project on the Chilean-Argentine border in October, after investing $5 billion in it, saying it will restart it when “conditions improve.”

Sources close to the ongoing negotiations told MINING.com the agreement reached today could be seen as a first step for the company to obtain the coveted "social license" for Pascua Lama.

The memorandum of understanding establishes that negotiations will last six months during which Barrick will provide project details to the community for corroboration with experts. The process, to be funded by the Canadian company, will follow international standards, the sources added.

The not binding agreement does not force communities to relinquish their right to pursue further legal actions.

Pascua Lama is expected to produce around 850,000 ounces of gold and 35 million ounces of silver in its first five years. Production, scheduled to begin this year, has now been delayed until mid-2016.

Barrick's shares were down 2.2% this morning in Toronto hitting $16.92 at 11:43 am ET.